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INDUSTRIAL COUNSEL 
ENGINEERING AND AUDITING 





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Industrial Counsel 
Engineering and Auditing 

Copyright, 1918, 

Illinois Engineering and Audit Co. 




Published by 

ILLINOIS ENGINEERING AND AUDIT CO. 

Engineers, Industrial Counselors, Auditors 

122 So. Michigan Avenue Chicago, Illinois 



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JUL -5 1818 



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TMP96-024670 



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Contents 

Page 

Foreword 7 

Industrial Counsel 9 

Results 11 

Investigation 12 

Reports 14 

Organization 16 

Management 18 

Equipment and Arrangement 20 

Labor 22 

Planning 25 

Stores 27 

Performance 29 

Inspection 30 

Records 32 

Auditing 34 

Sales 36 

The Service of Counsel 38 



Better Control Begets Better Returns 



Foreword 



INDUSTRIAL counsel includes engineering and audit- 
ing. As a lawyer aids in legal problems and diffi- 
culties, so industrial counsel assists in solving problems 
of organization and control, including mainly the divi- 
sions of business as outlined in this book. 

This profession is undergoing fundamental improve- 
ments. Industrial leaders are beginning to discriminate 
in their choice of industrial counsel. 

To help increase accurate discrimination, this book 
records briefly some of the fundamental qualifications of 
industrial counsel. 

These qualifications stand as a record of the character 
of the service offered and attained by the undersigned 
organization. 

To present these requirements in the true light of 
their importance and to conserve the reader's time in 
doing it — 

To aid the reader in deciding whether or not he needs 
modern industrial counsel — 

And to enable him to choose the best available 
service — 

Such are the aims of this book. 




President 

Illinois Engineering and Audit Co. 

122 So. Michigan Avenue 
Chicago, Illinois 

May, 1918. 



Better Control Begets Better Returns 



Industrial Counsel 

MODERN business, more than ever, is a ?ame of 
big minds. Never before was FUNDAMENTAL 
thinking and planning so necessary. Never before was 
the need for the RIGHT KIND of industrial counsel so 
urgent. 

Deep going changes in business cause increased de- 
mand for master minds at the top— minds that are com- 
pounds of scientific and practical ability. Lack of either 
kind of ability is a serious handicap. Industrial counsel 
must possess BOTH. 

To employ counsel that is primarily scientific may lead 
toward impractical application of scientific principles; 
while counsel that is unscientific lacks power to see the 
true causes of conditions and therefore to suggest 
fundamental and PERMANENT improvements. 

Industrial counsel must be able to supplement the 
thought and practice of the biggest mind in the business. 
It must be good enough to merit full confidence — or it 
had better not be used. Unless counsel fully comprehends 
your major problems, how can it ADEQUATELY help 
solve minor problems? For the cause of minor difficul- 
ties goes back to major responsibilities. 

To find and to help correct the primary causes of minor 
as well as major difficulties is the fundamental service of 
industrial counsel. 

As in all cases wherein demand is great and supply 
limited, inadequate service is offered. Lack of discrimi- 
nation has helped to hold back the development of the 
kind of counsel that is needed. Industrial leaders now 
know however, that few men possess the necessary com- 
bination of scientific and practical ability, and that one 
of their major problems is to find this kind of ability. 
To FIND IT — whether inside or outside the business — 
is a fundamental characteristic of leadership. 



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10 ILLINOIS ENGINEERING 



Modern industry uses specialized ability. But special- 
ization tends to be one-sided — unless the specialist is di- 
rected by well-rounded knowledge and experience of the 
sort that gives an accurate conception of the true place 
of his specialty in the business as a whole. 

Industrial counsel must never become an actual part 
of the business it serves, but must merit the confidence 
necessary to be given full knowledge of every part of 
the business. 

These pages state our full conception of what indus- 
trial counsel must be. Yet this book is but partial proof 
of the quality of our service. Results rendered to clients 
served is the proof we stand on. 



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AND AUDIT COMPANY 11 



Results 

THE service of industrial counsel begins with knowl- 
edge of existing conditions, both good and bad. Next 
it reveals the causes of existing conditions, both funda- 
mental and superficial. Then counsel uses these facts 
as the basis for constructive recommendations for mold- 
ing conditions and methods toward a result which is 
fundamentally and PRACTICALLY correct. 

It is one thing to know conditions as they are. It is 
another and more difficult thing to know the FUNDA- 
MENTAL causes of conditions. It is still more import- 
ant to know conditions as they ought to be. But to 
know how to make conditions what they must be to gain 
maximum net profits from the business — that requires 
practical and scientific creative genius of the high quality 
which industrial leaders have the right to expect in an 
organization equipped to render industrial-counsel serv- 
ice. 

Modern industrial counsel is in strategic position to 
find out the exact conditions of a business as a whole 
or in part. It has an advantage over investigators chosen 
from inside the business organization. Men inside the 
organization may know conditions AS THEY ARE. But 
it is not enough to know conditions and results. Good 
counsel not only observes symptoms, and diagnoses the 
case, but goes to the SOURCE of the trouble and deals 
with it. He is not satisfied with temporary relief. He 
wants PERMANENT results. He stands high in his 
profession as he is able to get at AND CORRECT 
CAUSES of bad conditions. 

Unless an industrial counsellor knows causes, how to 
look for them, and where to find them, and is able to 
recognize the FUNDAMENTAL causes of complicated 
as well as of simple difficulties, AND TO CORRECT 
CAUSAL CONDITIONS, he has not the right to call 
himself an "Industrial Counselor." 

Our aim ALWAYS is to attain fundamental, perma- 
nent, practical improvements. 



Better Control Begets Better Returns 



12 ILLINOIS ENGINEERING 



Investigation 



WHY investigate? When conditions are KNOWN 
to be bad, that question is easily answered. But 
conditions in a business may be bad without being 
known to be so. That is a serious situation. 

Investigation finds out the TRUE conditions of the 
business, whether good or bad. Just as it is a well made 
investment to have a GOOD physician examine the hu- 
man body now and then, so is it a well made investment 
to have GOOD counsel examine a business. 

Ninety-nine per cent of a business may be found all 
right and only one per cent wrong, yet that one per 
cent might so affect the vitality of the entire business 
as to cut deeply into net profits. Even though condi- 
tions were found to be 100 per cent right, to know this 
would make an investigation a good investment. To 
THINK conditions are right without KNOWING, is 
dangerous. 

When conditions are apparently right, but in reality 
wrong, the source of trouble is likely to be found hidden 
in past records or policies. The effect is always felt, 
though perhaps at some future time. Many labor diffi- 
culties, for example, may be traced back to a defective 
policy of control adopted several years before. 

Industrial counsel must investigate a business in the 
light of future as well as of present and past require- 
ments. Fundamental tendencies of changing conditions 
must be known. An APPARENTLY healthy business 
can derive benefits from the use of GOOD industrial 
counsel as much as can the business whose conditions 
compel immediate attention. 

When conditions are right, counsel recognizes it. He 
is not influenced by responsibility other than to make 
a GOOD investigation. He played no part in creating 



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AND AUDIT COMPANY 13 



the conditions he investigates. Therefore, when con- 
ditions are bad, his judgment of them is not influenced 
by APPARENT requirements. He is unbiased. He 
bears down on fundamentals. He sees the CAUSES of 
imperfections. 

Such is the man who is able to make a GOOD in- 
vestigation. 

You will find men of this type in this organization. 
We recognize the basic importance of the right kind of 
investigation. 

Shall we give you additional information concerning 
this phase of our service? 



Better Control Begets Better Returns 



14 ILLINOIS ENGINEERING 



Reports 



AN investigation does not necessarily result in a de- 
tailed report of findings and conclusions summarized 
and classified in logical order. The recommendation of 
counsel may not require complete investigation. 

For instance, a business may be larger than its finan- 
cial strength can accommodate. If best procedure with 
improvements depends on recapitalization, counsel is 
not warranted in attempting to make the best of bad 
financial conditions until recapitalization is proven to be 
an impossibility. 

The report of counsel in such a case would show con- 
ditions which make financial reorganization a necessity. 
Also counsel would end his service there until his client 
acted on the necessity or proved the impossibility of 
reorganization. Then if reorganization is possible, he 
would aid his client in putting it through. If impossible, 
he is justified in making the best of financial conditions 
as they exist. 

Ability to strike quickly and without unnecessary 
waste of effort at basic causes of trouble — and the will 
to stand by a decision once it is made even though it 
might cut off counsel's service at that point — is char- 
acteristic of the purpose and methods of industrial coun- 
sel which has the right ideals of professional service. 

But industrial counsel must not be hasty in making 
recommendations. Although his investigation is not 
carried beyond the point of gaining knowledge sufficient 
to warrant his recommendations, he MAKES SURE of 
facts, for he stakes his reputation on each report. 

Sometimes, when important basic conditions are un- 
known and cannot be determined, recommendations must 
be qualified. Good counsel admits it when any one or 



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AND AUDIT COMPANY 15 



more of his recommendations depend for their sound- 
ness on unproved, incomplete, or doubtful conditions. 
Absolute reliability of information is the standard. 

Practical anticipation of the limitations and resistances 
to be met in carrying out recommendations is also im- 
perative. Here again scientific ideals must be governed 
by practical judgment. Impractical recommendations 
must be AVOIDED. 

The report of industrial counsel must be complete, 
including adequate proof of conclusions and of the wis- 
dom of carrying out recommendations — all readily acces- 
sible when wanted. A good report tells a busy man what 
he wants to know and ought to know without waste of 
time. It is logically outlined and carefully summarized. 
Important conclusions are displayed. The heart of the 
report is made clear. The right arrangement helps an 
executive to act on recommendations at his will. 

May we tell you more about our investigations and 
reports? 



Better Control Begets Better Returns 



16 ILLINOIS ENGINEERING 



Organization 



THE service of industrial counsel includes, essentially, 
organization, management, operation and financial 
control. The FUNDAMENTAL' meaning and use of 
each of these divisions of business must be known. 

To effect the best reorganization, for instance, involves 
complete comprehension of the meaning of organization. 
It requires that organization be looked upon as the 
division of responsibility of the personal and the physical 
equipment of a business. 

The fundamental problem of organization is to so di- 
vide up the total of responsibilities that all available 
men and equipment may be afforded the opportunity of 
carrying, as units of the organization, their full capacity, 
but may not be loaded beyond their capacity. 

Another problem of organization is to supplement, 
and change if necessary, the existing supply of men and 
equipment so that an ideal division of responsibilities 
may be approached as closely as possible. 

While it is good policy to build a growing organiza- 
tion toward a well-balanced ideal, it is usually inad- 
visable to attempt to immediately change an existing or- 
ganization into an ideal type. The best possible use of 
AVAILABLE men and equipment is the PRACTICAL 
problem. 

The several functions of chief executives, for instance, 
may be clear cut, but one or more of these executives 
may possess less or greater capacity for the assumption 
of responsibility than is customarily understood by the 
titles they hold. While corporate organization defines 
responsibilities according to titles, operating organiza- 
tion should place responsibilities where they can best be 
taken care of. 



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AND AUDIT COMPANY 17 



This is the point of view of PRACTICAL industrial 
counsel. Our service tends to help mold conditions so 
that an ideally balanced organization may be attained in 
course of time — but not to hurry changes so that in- 
ternal stresses interfere with effective operation while 
changing. 

If you have an organization problem, we are ready to 
co-operate with you in a fundamental and practical solu- 
tion of it. 



Better Control Begets Better Returns 



18 ILLINOIS ENGINEERING 



Management 



GOOD organization is the foundation of good manage- 
ment. Ability and willingness to accept and to im- 
pose responsibility are fundamental characteristics of 
good managers. Ability for self-imposition of responsi- 
bility determines the rank of the individual as a manager. 

The primary source of good management resides in 
the head executives of the business. A primary problem 
is the creation of the policies of service the business ren- 
ders to customers and the most advantageous delegation 
of responsibility for the carrying out of these policies. 

Unless thorough consideration is given to the available 
organization of men and equipment at his disposal, the 
size of his business, and his own ability to supervise de- 
tails, it is impossible to say what the work of the execu- 
tive head of the business ought to be. But the head of 
a business should be in that high position because he 
has the exceptional ability necessary to comprehend and 
direct the fundamental steps in solving the major prob- 
lems of the business. 

An important part of the service of industrial counsel 
is to aid in defining the major problems of a business 
and in making sure that they are adequately taken care 
of. Industrial counsel that does not understand these 
bigger problems of management is likely to be incapable 
of gaining the best solution of minor problems. 

Ability to comprehend the FUNDAMENTAL policies 
and problems of a business, and of the industry as a 
whole, is necessary to give industrial counsel that point 
of view which enables him to find out the TRUE condi- 
tion of the business. Without this ability, counsel can- 
not make the best suggestions for the PRACTICAL ap- 
plication of scientific principles in the organization and 
management of a business. 



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AND AUDIT COMPANY 19 



In most cases, it is better not to employ the service 
of counsel unless that service comprehends the major 
problems of good organization and management. 

The service of this organization is based on these re- 
quirements. 

This requires wide experience and complete under- 
standing — including fundamental knowledge of financial 
control, auditing, and accounting principles as well as 
thorough and practical engineering knowledge and 
ability. 



Better Control Begets Better Returns 



20 ILLINOIS ENGINEERING 



Equipment and Arrangement 

THE problem of equipment and arrangement is the 
best adaptation of the best available physical equip- 
ment to location and site. 

The proper solution of this problem involves consid- 
eration of future development and probable changes in 
the factors on which the business depends for expansion. 

This may include consideration for enlargement of 
buildings and even re-location of the site and the con- 
struction of a new plant. 

Such problems come first. Their correct answers must 
give direction to the solution of the more detailed prob- 
lems of arrangement and equipment — to assure PER- 
MANENT improvement. 

Failure to consider future requirements has been the 
cause of large losses of capital — including great handi- 
caps in production until the period of rearrangement or 
of installation of new equipment has been passed. 

While this applies with relatively equal importance 
to the arrangement and equipment of a small depart- 
ment, the possible loss involved in neglecting it is most 
apparent when an entire building or plant is erected be- 
fore the RIGHT layout and specifications are made- 
giving rise to numerous limitations and difficulties which 
might have been considered. Ability to include such 
considerations is a requirement of industrial counsel. As 
an investment it should not be ignored. It requires 
PRACTICAL scientific foresight of the kind that is 
hardest to find. 

Lack of this ability is the cause of prevalent mistakes 
—even of such a minor mistake as not to make specifica- 
tions sufficiently complete (in the purchase and installa- 



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AND AUDIT COMPANY 21 



tion of a special machine, for example) with the result 
that bids cannot be accurately compared or the finished 
job may not be correct. 

Scientifically analyzing all the requirements for a ma- 
chine — its capacity, durability, adaptability, cost, and so 
on — is one thing. But to get the best machine for the 
purpose means more than this. It may involve consid- 
eration of possible development of improvements in de- 
sign or changes in requirements. Sometimes a machine 
which does not meet all the requirements in the light 
of rigid analysis may be the best investment. 

Our service in matters of equipment and arrangement 
is complete. It includes minor considerations as well as 
major problems. 



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22 ILLINOIS ENGINEERING 



Labor 

THE labor problem is high up on the list of the major 
responsibilities of management. It is now the least 
controlled source of profit and loss. 

This problem divides into finding and selecting labor- 
ers, training, paying and inspiring them toward their 
best effort. Success in solving any part of the whole 
problem depends largely on fundamental considerations 
which control the policies that guide the management of 
labor. These considerations must include thorough ap- 
preciation of the point of view of labor as it has been, 
is at present, and tends to be in the future. 

The foremost problem of buyers of labor is to know 
the tendencies of the development of what labor wants 
and to devise ways and means of meeting these wants 
so that the best results are obtained. 

Labor may be looked upon as a commodity to be 
bought and paid for like material or machinery, but there 
is a fundamental difference in its use. Whereas tools 
and material equipment have definite value, the value of 
labor is indefinite and depends largely upon the em- 
ployer's ability to inspire laborers to their best efforts. 
Here, even more than in tools and materials, the im- 
practical application of scientific policies and principles 
is disastrous. Human nature determines its own laws, 
which are ever shifting and changing. 

The man who handles labor successfully must KNOW 
the laborer. Industrial counsel called in to help solve 
this problem is greatly handicapped if it lacks the kind 
of knowledge that is gained from direct contact and as- 
sociation with laboring men. Knowledge of labor gained 
by indirect association is never complete. 

Counsel must have PRACTICAL knowledge of labor 
to gain the best return for the effort expended in any 



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AND AUDIT COMPANY 23 



operation — to know how to impart the best method in a 
manner to take advantage of the skill which the operator 
has or may develop. Counsel must realize at the start, 
for instance, that the worker sincerely thinks his own 
way of performing the operation is the best that can be 
done, and that he therefore has a right to be opposed 
to change^until he tries and UNDERSTANDS the bet- 
ter method. 

Such practical knowledge is also necessary in selecting 
and training instructors of labor. They must be able to 
grasp the best process and the best way to get workers 
to apply the process. This requirement is even more 
necessary in an instructor of instructors. And even more 
necessary is it that these facts should be understood by 
the man or men who create the policies of labor control 
which direct the selection and training of laborers and 
instructors. 

The right kind of counsel offers almost unlimited 
service in developing the value of labor — a value that 
can be increased far beyond the realization of men who 
lack FUNDAMENTAL comprehension of the problem. 
And labor will stay with or leave an organization in 
proportion to the development of its value. 

To keep CONSISTENT records of the results of labor 
in a CONSISTENT manner and to USE them— to get 
the laborer to study and appreciate the results of his own 
labor — to make him able and willing to improve him- 
self—to use his hands AND HIS HEAD— these also 
are the aims of modern industrial counsel in handling 
the labor problem. 

To get and develop bosses who understand labor and 
know how to treat labor and turn potential labor into 
actual labor — bosses who are able to meet the men on 
their own level yet not become common with them — 
that is a difficult problem of the kind that counsel must 
be able to solve. 

Careful choice of counsel is, therefore, most necessary 
when labor problems are involved. PRACTICAL coun- 



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24 ILLINOIS ENGINEERING 



sel is here most urgent. The mistake of blindly apply- 
ing a fixed scientific notion of management, just because 
it is theoretically sound, is most dangerous in dealing 
with labor. 

For example, the question of remuneration. Too often 
a fixed and inflexible system is installed without con- 
sideration of varying requirements. Maintenance of the 
RIGHT balance of emphasis on both quality and quan- 
tity considered with the value of time, is the problem. 
Any method is deficient in so far as it does not maintain 
this balance. No system has yet been devised which 
maintains it under all conditions. But good practical 
judgment in the choice and application of a system will 
closely approach maintenance of this balance. 

Furthermore, any system must also be designed to 
make the worker feel, as much as possible, that he is 
PART of the business and that his pay is his part of 
the net returns from operating the business. The farther 
from paternalism is the pay he gets, or any part of it, 
the more the workman appreciates his remuneration. 
How to give what labor wants is an important phase of 
the problem. 

The supreme test of industrial counsel is ability to 
handle effectively the labor problem. 

Shall we confer with you on the help we can give 
toward a better solution of your labor problem? 



Better Control Begets Better Returns 



AND AUDIT COMPANY 25 



Planning 



PLANNING is another major responsibility of man- 
agement. It is more than specification or a planning 
board. Planning is the determination and visualization 
of the methods to be followed in order to obtain the best 
results from the forces of operation. 

Standardization and specialization are fruits of plan- 
ning. Standardization is the use of uniform methods 
and equipment for the attainment of like results. It in- 
creases and improves opportunity for specialization. 

To know what is to be done, by whom, where, how, 
and when — before it is done — that is planning. Its 
fundamental principle applies in solving any practical 
problem, business or industrial. 

While centralized or decentralized planning depart- 
ments, or combinations of these, including the various 
adjuncts such as planning boards, work boards, charts, 
maps and so on, are important considerations, they are 
of value only in so far as they tend to create a minimum 
TOTAL of the efforts of planning and performance. 

If the true relationship of planning to performance, in- 
cluding a true conception of the fundamental meaning 
of planning, is kept in mind, the usual mistakes in con- 
trolling the forces of performance may more easily be 
avoided. 

Knowledge of all the systems, including variations 
from standard systems of planning, is desirable. But 
this information is as dangerous as it is valuable, unless 
practical knowledge goes hand in hand with deep and 
accurate scientific control of it. 

Scientific generalizations concerning the kind and 
quantity of planning to be used are dangerous. For in- 
stance, it cannot be maintained that the more the execu- 



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26 ILLINOIS ENGINEERING 



tion of any work must vary from a standard, the less 
detailed should be the planning. Just the reverse of this 
idea may be best when cost is considered. 

It would be safe to say, however, that the more the 
conditions governing the execution of a piece of work 
tend to vary, the less desirable is it to separate the times 
of planning and performance, and the less distinct is the 
line of demarcation between these functions. 

Many basic factors, such as the best time and amount 
of delivery, including control of raw materials as af- 
fected by the best quantity and time of supply, which in 
turn depends on stores facilities and methods, including 
purchases and deliveries, all enter into the complex prob- 
lem of good planning. 

Planning, therefore, is work for the highest type of 
industrial counsel. The opportunities for wrong pro- 
cedure are numerous. This responsibility must rest on 
ability that is SCIENTIFICALLY PRACTICAL. 

Planning that is FUNDAMENTALLY right is as dif- 
ficult to develop as it is valuable. Our service as in- 
dustrial counselors yields FUNDAMENTAL improve- 
ments in planning. 



Better Control Begets Better Returns 



AND AUDIT COMPANY 27 



Stores 

TO KNOW what is invested in stores at all times — 
to have what materials and tools you need and only 
in economical quantities, where and when you need 
them — and to KNOW you have them — is the problem 
of stores. 

This includes much more than stores keeping and 
handling. It involves the problem of stores CONTROL, 
which goes back into market conditions. It also in- 
cludes the establishment of the best adjustment of 
financial resources and storage facilities with possible 
changes in production as well as with market conditions. 

Under normal market conditions of supply and de- 
livery, the problem of stores control is complex. But 
when the conditions of supply are unsettled, this com- 
plexity is greatly increased. At best, methods of stores 
control must be flexible to accommodate changing con- 
ditions. 

Stores keeping itself is not a simple problem. It 
means more than getting materials into store rooms or 
compartments, caring for them there, and getting them 
out when wanted. It goes back to knowledge of ship- 
ments of purchases. It may even include specifications 
for packing the goods by suppliers, so that unloading, 
receiving, and inspection are best facilitated. 

Stores handling in the plant involves the problem of 
fixing the responsibility for the authorization of requisi- 
tions for, as well as the delivery of, materials and tools. 
Tool control, however, also includes the problems of 
inspection and maintenance. 

Stores handling also includes the problem of arrange- 
ment and equipment of local stores facilities for delivery 
of the right quantities. 



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28 ILLINOIS ENGINEERING 



When work space is more valuable than central stor- 
age space, the policy of small quantities and frequent 
deliveries is usually best. Sometimes however, the cost 
of handling large quantities of delivered materials is 
not sufficiently greater than the cost of handling small 
quantities to warrant delivery in small quantities. The 
correct frequency and quantity of delivery is determined 
by the requirements of planning and operation, con- 
sidered with cost of stores handling. 

But industrial counsel must first comprehend and 
solve the problems of stores control if it would success- 
fully solve the problems of stores keeping and handling. 

In this problem, as in others, our service is both funda- 
mental and practical. 






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AND AUDIT COMPANY 29 



Performance 



PERFORMANCE is the kinetic force without which 
the invested capital in a business would return a 
net loss. 

It is the life of the business. All the rest of the busi- 
ness is merely structure to facilitate performance. The 
better and more complete the structure the greater the 
effectiveness of performance. 

The problem of operation fundamentally is to make 
capital investment yield the best profit. This involves 
the problem of overcoming the resistance of imperfec- 
tions in organization and management. Elimination of 
these imperfections simplifies the problem of perform- 
ance. 

All improvements in organization, management, ar- 
rangement, equipment, tools, financial administration — 
in all the structure of the business — are made to gain 
better performance. A fundamental aim of counsel is 
to make sure that the force of performance is employed 
against minimum resistance. 

Inasmuch as all the capital investment represents 
money that cannot be regained except through perform- 
ance, additional investment which makes sure that opera- 
tion is carried on to the best advantage ought not to 
be neglected. 

Counsel capable of appreciating the vital relation- 
ship between performance and investment, has as its 
fundamental aim the improvement of performance itself 
— beginning with NECESSARY improvements in the 
structure of the business. 

The basic problem is to gain the best possible bal- 
ance between the forces of investment and performance. 
Improvements in either may be carried to the point of 
diminishing returns. 

Again, scientific ideals must be governed by practical 
judgment. 



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30 ILLINOIS ENGINEERING 



Inspection 



THE less that inspection is necessary, the better. 
But it cannot be said that inspection is any the less 
desirable because it is less necessary. 

Inspection is based on the necessity for a perpetual in- 
ventory of quality. It measures materials, tools, per- 
formance, and product against standards which repre- 
sent perfection as nearly as that state is conceived to 
exist. 

Inspection must be independent of stores and plan- 
ning — including inspection of raw and finished materials 
and tools as well as of performance. It must be unham- 
pered in its effort to criticise accurately, impartially and 
constructively. 

As in the case of all major responsibilities, good in- 
spection begins with thorough appreciation of its 
FUNDAMENTAL requirements. This involves ac- 
curate analysis of what is good inspection and what is 
a good inspector. 

This analysis reveals an important difference in the 
requirements for inspection of materials and perform- 
ance. The good inspector of materials and product must 
be a good comparative critic, while the inspector of 
performance must be a CONSTRUCTIVE as well as a 
comparative critic. These two functions are as much 
different as are accountancy and salesmanship. 

Inspection control therefore must carefully discrimi- 
nate between the requirements of ability necessary to 
inspect materials and products and that required to in- 
spect performance. 

A good inspector of performance is primarily an in- 
structor. He is a builder of human ability. He must 



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AND AUDIT COMPANY 31 



know men and how to handle and develop them. His 
problem is to increase the value of labor both to the 
business and to the laborer himself. 

To determine the amount and kind of inspection neces- 
sary requires that industrial counsel must be both scien- 
tific AND PRACTICAL. It is not enough to know 
the necessity for standards, for instance. But ability to 
create PRACTICAL ATTAINABLE standards is re- 
quired. 

Again, to say that the greater the chance for waste 
of time or of materials the greater the need for inspec- 
tion, may be sound enough. But SPECIFICALLY what 
is the need for inspection and how to meet it — in the 
light of actual conditions — is the question that indus- 
trial counsel must solve. 

Likewise, to know that the right personality in an in- 
spector of performance is a more important factor than 
in an inspector of materials, is important. Or to know 
that any inspector must be conscientious and exact, is 
necessary. But to be effective, such knowledge must be 
supplemented by ability to recognize these qualities in 
a man. 

Our service is based on these requirements. 



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32 ILLINOIS ENGINEERING 



Records 

RECORDS, fundamentally, are the visualization of 
the RESULTS of expended effort. They show 
what HAS BEEN DONE, while planning, stores and 
inspection protect the business before and during per- 
formance. 

Records include costs, for costs are the visualization 
of results expressed in financial figures. Records also 
include accounting which is visualization of results so 
classified and summarized as to record cumulatively all 
income, operation and disbursements. 

Records are valuable for protection. They are useful 
in the formation of policies to guide present and future 
actions. But they are good only in so far as they may 
be interpreted AND USED as guides to the maintenance 
and improvement of the fundamental factors which de- 
termine the success of the business. 

Many useless things may be shown by records, and 
many results may be revealed which might have been 
had for less effort in other ways. Such records are a 
waste, and they indicate lack of understanding of the 
real meaning and purpose of records. 

The basic problem of records is the maintenance of 
the best balance of effort between obtaining and inter- 
preting them and the results obtained by their use. 

Records are the place where engineering and account- 
ancy join hands. Production records, including costs, 
are mainly within the field of engineering. 

Accounting is a continuous cumulative summary, 
while costs are statistics complete in themselves at any 
point. Costs apply to detailed and isolated efforts. Ac- 
counting applies to the combination of efforts of the en- 
tire organization. 



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AND AUDIT COMPANY 33 



Costs include materials, performance, and burden. 
Material costs and labor costs are results of records of 
operation. Burden accumulates from many causes, some 
of which are results of performance, while others are 
results of investment or management. 

Burden figures are drawn from accounting records, 
analyzed according to the causes of their accumulation. 
They go from the accounting department to the cost 
department where they are merged into costs and then 
sent back to the accounting department expressed in 
the form of cost of product. 

Industrial counsel must know this fundamental rela^ 
tionship between costs and accounting to determine cor- 
rect costs on one hand and to make possible true ac- 
counting on the other. 

Accounting methods which properly include records 
of operation are daily becoming more necessary. Opera- 
ting conditions may need some changing in order to 
make their records adaptable to a true accounting sys- 
tem. But the accounting system, in the first place, must 
be a TRUE record of operation in order to be effective. 

Therefore, we include industrial counsel, engineering 
and auditing — for auditing necessitates mastery of ac- 
counting and keen insight into records. 



Better Control Begets Better Returns 



34 ILLINOIS ENGINEERING 



Auditing 



OUR auditing service is PART of our organization. 
We therefore offer only the service of auditors 
who have both scientific ability and practical judgment 
— who are, first of all, GOOD accountants. 

An auditor must be NATURALLY a good analyst. 

Like our engineers, he looks for good as well as bad 
conditions. His opinion must be the judgment of a man 
whose training, experience, and natural ability command 
full confidence. 

When a partial audit only is required, a GOOD auditor 
is the best investment; while for a complete audit, care- 
ful choice of an auditor is imperative. 

A good auditor knows the FUNDAMENTAL con- 
nection between general accounts and costs as explained 
in the preceding section. He is acquainted with and in 
sympathy with practical, scientific methods of produc- 
tion. He is ABLE TO COOPERATE with production 
records. 

An auditor also fully appreciates the fundamental con- 
nection between production and sales, as set forth in 
the following section. He renders a COMPLETE ac- 
count of the TRUE condition of the business as a whole. 

In short, he UNDERSTANDS, in a fundamental and 
practical way, the interdependent relationships between 
all divisions and subdivisions of a business. 

These exacting qualifications are why GOOD auditors 
are so scarce. We have in our organization auditors 
who meet these qualifications, and they are given the 
full cooperation of our engineering talent. 

To KNOW that a system of accounting, including 
costs, tells unerringly what should be known — to KNOW 



Better Control Begets Better Returns 



AND AUDIT COMPANY 35 



what records give the most valuable comparisons — to 
KNOW that an accounting system shows results in a 
manner to satisfy a banker when the necessity arises for 
extension of credit — to KNOW ALL the valuable facts 
to be gained through the interpretation of records — such 
is auditing service. 

Even though the system of accounting tells all that 
should be known and with no wasted effort either in 
keeping or interpreting accounts, it is valuable to have 
ASSURANCE that it is being properly and honestly 
followed. 

Even though an auditor is regularly employed in a 
business, an independent professional audit is now and 
then advisable. An "outside" auditor, like the "outside" 
engineer gives a report of conditions as they are in the 
light of what they ought to be. 

Not even a one-man business can afford to neglect 
auditing service. 

The cost of our professional auditing service is low 
when results are considered. And we include in "re- 
sults" thorough consideration of the future as well as the 
present requirements of an accounting system — based on 
a true understanding of the fundamental relationship be- 
tween parts of a business. 

Should you need auditing service of this kind, you will 
find it — and only this kind of service — in this organiza- 
tion. 



Better Control Begets Better Returns 



36 ILLINOIS ENGINEERING 



Sales 



INDUSTRIAL Counsel must understand the funda- 
mental connection between production and distribu- 
tion. The demands of consumption control production. 
This is the point of view of sales. It must be the view- 
point of production, and therefore of industrial counsel, 
even though his service may not include intensive sales 
counsel. 

We appreciate the close cooperative connection be- 
tween sales and production policies. Sound selling poli- 
cies and methods are directly dependent, for most suc- 
cessful execution and results, on the effectiveness of pro- 
duction in turning out products which permit the prac- 
tice of the best modern merchandising principles. 

Also, high standards of merchandising tend to pro- 
mote high standards of production which render the kind 
of production service that warrants the use of sales 
methods which are in keeping with fundamental tenden- 
cies of improvement in advertising and selling. 

One of these tendencies, for example, is the increasing 
responsibility that producers assume for the satisfactory 
use of their products. More than ever, manufacturers 
are willing to be held responsible for full satisfaction in 
the ultimate consumption of their products. This carries 
with it the responsibility of satisfaction to distributors, 
such as jobbers and retail dealers. 

Controlled demand, especially in a highly competitive 
market, is desirable and, in many cases, is necessary to 
give production its best opportunity to maintain quality 
of output together with adequate quantity and low cost. 
This is the cause of the rapid increase in standardized 
products identified with trade-names and trade-marks — 
and the use of selling methods which make known TO 
CONSUMERS the means of identifying these products. 



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AND AUDIT COMPANY 37 



The necessity of maintaining the standards of quality 
and supply represented by these trade-names and trade- 
marks is apparent. Herein is the influence of good mer- 
chandising on standards of production. The two must 
go hand in hand. Each is both cause and effect of the 
other, and must be able to get from and give to the 
other the fullest cooperation. 

Industrial counsel must thoroughly appreciate this 
relationship. Standardization of production depends for 
its full value on standardized distribution and selling 
practice, for the aim of standardization of merchandis- 
ing methods is to gain an ASSURED, STABLE, and 
STEADILY increasing market — through control of the 
factors which cause fluctuations in demand. 

Our engineering and auditing service offers specific 
help in gaining the most advantageous co-ordination of 
production with sales. 



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38 ILLINOIS ENGINEERING 



The Service of Counsel 

TO find the best AVAILABLE ability in COR- 
RECTLY solving ALL the problems in a business 
is the FIRST responsibility of management. 

Whether this ability exists inside or outside the busi- 
ness is not the question. The more of it that exists in- 
side the business, the better. But the aim of GOOD 
industrial counsel is to make a business less dependent 
on outside ability. 

To do this, counsel's conception of your problems must 
be FUNDAMENTAL. He must know, for instance, 
the BASIC meaning of organization, management, equip- 
ment, records, and all the other divisions of business as 
set forth in this book. 

Industrial counsel, therefore, must be CAREFULLY 
chosen — by one who KNOWS the fundamental qualifi- 
cations of GOOD counsel. This book states these re- 
quirements. And this book records the policies of serv- 
ice AS APPLIED in this organization. 

Returns from your investment in this kind of service 
do not depend on the fee you pay for it. But your re- 
turns will be great or small, according to your need for 
counsel, the way in which you make use of counsel — 
and the QUALITY of the counsel you choose. 

Do you KNOW whether or not you need the service 
of industrial counsel? If not — that is good evidence of 
need for it. 

Many industrial executives, although they have ade- 
quate ability within their organizations, yet employ coun- 
sel — especially when counsel is needed to help them solve 
major problems. They lack time rather than ability. 



Better Control Begets Better Returns 



AND AUDIT COMPANY 39 



Our first object of conference with prospective clients 
is to determine whether or not industrial counsel is 
needed. 

Our policy is to serve only where there is unquestioned 
need of the kind of service we are equipped to render. 

Observance of this professional principle is the cause 
of our willingness to let our service sell itself. 

This attitude controls the agreements we make with 
all clients. We have but one grade of service for all. 

We therefore do not depend on contracts which in- 
volve the slightest degree of risk to our clients. 

Whether or not you know that you need our quality 
of service, we shall be glad to confer with you on re- 
quest, either by mail or in person. 



ILLINOIS ENGINEERING AND AUDIT CO. 

Engineers, Industrial Counselors, Auditors 
122 So. Michigan Ave., Chicago, Illinois 



Better Control Begets Better Returns 



